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An advisor wants to be hands-on & knows VP & C level execs at target companies. I offered 0.25% equity over 2 years, but he would like some incentive built in for contracts he can get us. What is a fair cash/equity compensation to give based on ACV?

J
Written by Jasmine Sunga
Updated over 5 years ago

we did something similar to this. brought base down to 0.1% over 1 yr vest (over less time = you can re-evaluate if things aren’t working) + 0.1% for every signed contract

we didn’t base it on ACV, bc that can often be a product of your being early stage, your customers just piloting, etc.

better to make these things directly influenced by the person you’re incentivizing IMO

we have similar people who are showing interest. Typically cost of sales for enterprises is 30%. For your initial dozen customers, you can offer him very high up to 20% of ARR for first two years. Also to further incentivize (if he wants equity), put a deal size incentive (if he does over $100K ARR, then 20% + 2000 options or whatever you feel right… But as far as pure equity up front, i wouldn’t go more than 0.25%…  As you win deals and bring more people like him, you can lower it to 10% or so… Usually reseller charges 10-20% , so you can consider him as VAR (Value Added Reseller). It would be his interest to drive and close the deal.

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